Corporate Social Responsibility in India A Meaningful Organizational Initiative for Sustained Business Presence and Growth

By Priyanka Nema, SHRM-CP Jan 8, 2018
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There has been an inherent understanding since times ancient in India that no business can grow or succeed in isolation. The history of India provides much proof of this realization that sustainable growth of business requires inclusive development and progress of employees, community and environment. Established merchants of the past and Industrial families in modern times have emphasized social progress through philanthropy and charity by building temples, hospitals and academic institutions. The amendment of Companies Act of 2013 is a formal extension of this deep-rooted business culture based on ethical and fair means of making and sharing of the profits.

Simply put, Corporate Social Responsibility (CSR) translates to Indian corporates, in their standing as global citizens, running their businesses with ethical and economical responsibility towards the people, planet and profits. However, CSR has taken on an even more personal role as businesses and prominent families have been contributing more effectively in recent years towards building the nation.  Given the wide socio-economic gaps in Indian society, in addition to a changing culture, Indians are becoming more aware of their role as contributors towards gearing the nation for imminent economic growth. Indian companies are increasingly sensitive to the fact that India is on verge of claiming a strong foothold on the global economic and political map, and CSR plays a key role..

CSR – Assuming An Integral role in Corporate Strategy Planning

The Indian Government has set a mandatory requirement for all companies that have a net worth of INR 5 Billion, a turnover of INR10 Billion or a net profit of INR 50Million, to spend a stipulated amount of two percent of their profits after tax on CSR activities. At the same time, the government allows for a company's board to give supporting reasons in case they fail to do so.  

Despite the mandatory nature of the CSR spend, there still remains a certain voluntary and philanthropic nature to the social activities with which a company chooses to engage in India. The organizations which were already involved in social work in various capacities before the passage of the Companies Bill of 2012 by the Indian Government, continue with their initiatives, which have over time become closely associated with the business families. For instance, the Birla Education Trust was established in 1929 by the then head of the Birla Industry Sh, GD Birla. The Birla Institute of Technology and Science at Pilani was established in its present form in 1964, and continues its active involvement with progressive higher education after the CSR Policy was introduced by the government with the same philanthropic nature.

This voluntary aspect extends and spills over across the organizations as employees volunteer support to these causes at many levels. Organizations typically match the monetary donations made by employees towards social causes, and recognize and reward the employees for their voluntary efforts and time spent in social initiatives.

While there was  a sporadic and personal approach to social undertakings in the past, the addition of clause 135 has led to organizations developing inclusive, structured, long term, and sustainable social impact plans. These plans are usually in line with the business objectives of the organization and resonate with their workforce. For instance, Dr. Prashant Desai, Director of Regulatory Affairs of Johnson and Johnson (J&J) India, a leading pharmaceutical and healthcare consumer packaged goods company, shares that they '"focus on Building healthcare capacities – training of frontline healthcare workers/caregivers; Preventing diseases, reducing stigma and disabilities"'.

While J&J aligned their CSR initiatives with their business domain, Brillio aligned theirs with their stakeholders' social inclinations, according to the global Head of CSR at Brillio, Abhishek Ranjan. He says that their CSR Policy and program "was part our agenda from the very first year of our operations" and is focused on educating underprivileged children, since their employees felt most strongly about this cause.  

Introduction of the CSR policy has encouraged many Indian companies to identify the social causes and geographic themes that they are passionate about. Next, they hold  careful deliberations to formulate effective CSR policies and programs that find acceptance and support from stakeholders. This is an important aspect not only for the success of the program, but also in achieving the desired impact and bolstering the reputation and credibility of the organization with their employees and the community.

The Many Soft Gains of Running a Robust CSR Program

A large number of companies run their CSR initiatives through dedicated CSR teams, usually well integrated with the Human Resources department, while others set up not-for-profit trusts or foundations. Once an Organization has a well-defined CSR policy in place, the next step usually is to partner with a local not-for-profit organization or government initiative. This provides companies with a wider reach and creates an impact at the grass-roots level. Both the companies and stakeholders benefit from the feel-good factor of a positive social impact and goodwill. The company board is actively involved in many cases with CSR committees while developing CSR policies and implementing CSR programs.

The Companies Bill of 2012 requires employers to report their CSR activities and expenses incurred in the public domain. The disclosure of CSR reports and other information on company websites has resulted in transparent communication between the organizations and its stakeholders. The advantages of the transparency and communication are reflected in many soft benefits for the company. The open information endorsed by the board of the company strengthens the trust factor within the community, resulting in brand establishment and deep consumer loyalty. Companies recognize that CSR activities result in positive marketing. As Juhi Gupta, Senior Manager and Head of Sustainability at Pepsico India reinforces, "It is also a great enabler for enhancing corporate reputation." CSR Programs are resulting in positive branding with external stakeholders associated with the company and its products – the key to a successful business and sustained growth.

As most Human Resource departments would emphatically share, a robust CSR program provides key support in building a skilled and loyal workforce.  It helps attract and retain good talent. The voluntary involvement of the employees in CSR activities creates an engaged and motivated workforce and leads to genuine sense of pride in the company and its business. CSR activities provide an opportunity for employees at varied hierarchical levels in the organization to engage on a common platform providing an excellent platform for team-building. Studies also show that Millennials give a lot of importance to giving back to the community and as organizations struggle to effectively engage 'Millennials', CSR can prove to be an efficient tool to engage the tech savvy generation demanding a more fulfilling work life experience from their employers.

A Win-Win for All

Corporates have much to gain from CSR initiatives. The philanthropic and social contributions of India's legacy industrial and business families, like the Birla and Tata families, have cultivated an innate respect for these companies across the nation through generations. Their market penetration is so deep that despite changing economic and cultural scenarios, these companies continue to thrive on the goodwill earned, so much so that even today it is a matter of pride to work for these companies and buy their products. There are many exemplary cases of Public Private Partnerships (PPPs) like PepsiCo and ADI (Alternate Development Initiative) for rainwater harvesting, and collaboration by many companies with Prime Minister Narendra Modi's Swatch Bharat initiative, that showcase how corporates of India can partner to make a real contribution towards building the nation.

The CSR efforts are a win-win for all. As businesses grow, the community gains. And as the society flourishes, businesses gain - resulting in a collaborative growth within the nation.

About the Author

Priyanka Nema SHRM-CP, PHR is Director of Human Resources at Groupsoft US Inc, responsible for a diverse workforce across Asia, Australia and North America. She can be reached by email at : priyankanema@hotmail.com.


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